The Economist May 7th 2022 Business 63ingothersellingpointsinstead. They tend
to work faster than Chinese rivals and to
offer superior quality. Having completed a
big railway project in Ethiopia a few years
ago, Yapi Merkezi more recently beat Chi
nese rivals to build the first section of a
Tanzanian railway connecting Dar es Sa
laam and Lake Victoria. In December it sig
ned a $1.9bn deal to build the third section.
The Turks are also happy to comply
with African governments’ demands to
hire local subcontractors and workers,
which the Chinese have been more reluc
tant to do. This is in large part making a vir
tue out of necessity: whereas Chinese
firms can afford to bring their own skilled
workers, including engineers, to Africa,
Turkish ones often cannot. Since Turkey
lacks China’s resources to be in all places at
once, Mr Arioglu observes, “the only way
we can survive in the long run is to become
local in all the countries we work in.”
When Summa began working in Senegal in
the 2010s, its workforce was 70% Turkish,
remembers Mr Bora. That figure is now
down to 30%.
Some Africans still grouse about the
Turkish presence in their countries. Like
the Chinese, “they come and go,” grumbles
one official, creating only fleeting jobs. An
other complains that the Turks (and other
newcomers) invest in construction, min
ing and ports rather than higher up the val
ue chain, which would do more for Africa’s
broader economic development. And they
could launch more joint ventures with Af
rican companies.
Such gripes are, however, outweighed
by one last consideration increasingly
prized by African governments. “We came
at a lucky time,” recalls Mr Arioglu, “when
both Ethiopia and Tanzania were looking
for alternatives to Chinese companies.” As
more subSaharan countriesfollow suit,
being nonChinese is a Turkishtrait that
China’s builders cannot match.n
Playing footsie with Africa
LogisticsDigital
decongestants
F
orto seemsan unlikely tech darling. It
does not make gadgets, build the meta
verse, forge cryptocurrencies or launch
rockets. The sixyearold startup from Ber
lin, whose main business is arranging the
transport of cargo from one place to an
other, has nevertheless managed to raise
nearly $600m from venture capitalists. Its
backers reckon the firm can shake up the
archaic freightforwarding industry. It has
tripled its business in each of the past four
years, boasts Michael Wax, its boss, and is
now one of the top ten forwarders in the
busy trade lane between China and Germa
ny. In March it announced $250m in new
funding at a valuation of $2.1bn.
Forto is not the only freight tech startup
attracting investors’ attention. With the
world’s supply chains gummed up by
bottlenecks, lockdowns and other disrup
tions, venturecapital (vc) firms are pour
ing billions into companies offering ways
to make freight transport more efficient. In
2021 supplychaintechnology firms raised
more than $62bn, according to PitchBook,
a data provider, more than twice the figure
in prepandemic 2019 (see chart). Of that,
nearly $9bn went to freighttech startups.
PitchBook counts more than a dozen priv
ate freighttech “unicorns”, valued at more
than $1bn. Viki Keckarovska of Transport
Intelligence, a firm of consultants, expects
more funding rounds this year.
Part of the appeal lies in the industry’s
size and potential for disruption. The
freightforwarding business alone is worth
$475bn in annual revenues, reckons Arm
strong & Associates, a supplychain re
search and consulting firm. The broader
“thirdparty logistics” market, which in
cludes transport management and ware
housing, generates sales of $1.4trn. At the
same time, freight remains technologi
cally backward, especially the crossborder
sort. “This industry is completely offline,”
marvels Zvi Schreiber, boss of Freightos, a
digitalfreight marketplace. “You would
expect that shipping a container would be
just as digital as booking a flight,” he says,
“but it is not at all.” Just getting a quote can
be a headache. “For 90% of the freightfor
warders today it still takes one or two days
to come back with a price,” says Mr Wax.
This is starting to change thanks in part
to whizzy new software platforms de
signed to streamline the process of ship
ping freight overseas. Flexport, a digital
freightforwarder based in San Francisco,automatesmanyofthesupplychainpro
cessesthatweretraditionallydoneman
ually,includinggettingquotes,fillingout
documentsandcoordinatingwithship
persandcarriersalongthesupplychain.
Thenineyearoldstartup,which earned
$3.2bninrevenuesin2021,wasrecently
valued at more than $8bn. Project44, a
supplychainvisibilityplatformfromChi
cago, lets retailers and brands monitor
milestonesintheircargo’sjourney,suchas
whenitisloadedontoa ship,leavesthe
portorarrivesatitsfinaldestination—all
inrealtime.Theycanalsomakeadjust
mentsorrerouteshipmentsif needed.
Onecommonfeatureofsuchplatforms
istheabilitytogleaninsightsfromdata.
Bigshippersandlogisticsproviderstypi
callymanagetheirshipmentsinsoftware
knownasa transportmanagementsystem
(tms), which tracks shipments as they
maketheirwayalonglogisticsnetworks,
fromthefactorytotheportandfinallyto
thecustomer.Suchsystems,whichhave
beenaroundsincethelate1980s,areuseful
databasesofinformation,saysEvanArm
strong, president of Armstrong& Asso
ciates.Buttheyarenotclever.“Thefirst
stepwasgettingeverythingontoatms.
Nowthenextstepistakingthosetmss and
makingthemintelligent.”
Although recent supplychain snarl
upshaveplayeda partinboostingdemand
for logistics software, they are not theA flotilla of startups promises to
streamline the world’s supply chainsFreighted with feelingSources:PitchBook;TransportIntelligence *To April 26th60
50
40
30
20
10
0
21201918172016Worldwide venture-capital investments
$bnOthersupply-chain techFreight techBeaconZencargoInstaFreightNowportsSennderFortoFlexport1.51.00.50 2.52.0Digital freight-forwarders
Venture-capital investments, 201-22*, $bn